tv The Kudlow Report CNBC November 12, 2013 7:00pm-8:01pm EST
this arbitration thing. maybe that's just the opportunity you need to get into this incredibly high-quality stock because i being aren't find any other. there's always a bull market somewhere. i'm jim cramer and i will see you tomorrow! former president bill clinton chided obama today, telling the president to honor his commitment and keep his promise to let people keep their health plans. then clinton added this should to be done quote even if it takes a change to the law. end quote. right on cue, a late breaking headline this afternoon the california insurance commissioner said more than 1 million cancellation notices have been sent to californians. the best and brightest minds in business and on wall street getting together today at the dale book conference. we'll have the highlights from a busy day of great interviews on cnbc. plus, raising the minimum wage. will it actually cause the unemployment rate to go up with
special damage to lower income folks who will be priced out of the market? what a terrible idea. we're going debate what the a leader of one of the country's biggest unions. all those stories and much more coming up on "the kudlow report," beginning right now. good evening, everyone. i'm larry kudlow. this is "the kudlow report". we're live here 7:00 p.m. eastern, 4:00 p.m. pacific. former president bill clinton weighing on president obama's oft repeated if you like your plan you can keep your plan promise clinton says let them keep it. >> i personally believe if it means changing the law the president should keep his commitment. >> he has that story exactly right. how is this for spin. the white house today says the president agrees with the former president. >> as you saw, the president say
in an interview with nbc last week the answer is yes, the president has tasked his team with looking at a range of options as he said to make sure that nobody is put in a position where their plans have been cancelled and they can't afford a better plan even though they would like a better plan. >> all right. here's the problem. american plans have already been cancelled. in the millions such as california and the pink slips keep coming. president obama so far seems to be opposed to any new legislation that might allow him to keep his promise on your insurance and doctors. so let's talk about this and see where obama will go. here we wk to the show democratic strategist, former clinton adviser james carville and president and ceo, chris ready. james, good to see you. clinton as usual has the story completely right. what i don't get, you're a clinton guy, what i don't get is obama says jay carney says they understand they will help but they are not doing anything. there's a lot of legislative
proposals, as you know, from democrats and clinton -- i mean obama is not supporting them. why? >> first of all he said as jay carney correctly pointed out he told chuck todd on msnbc he would try to keep these people in. understand this is only if you have insurance in the private market, this is only under certain circumstances that this applies. who knows. they may be able to figure a way for these people to keep it. it's not going to apply to whole lot of people anyway. obama has said the same things along the same line that president clinton has. >> i don't know. let me bring chris ruddy in. chris, first of all, bill clinton didn't hedge. bill clinton didn't say if it's the right plan or if it meets regulations. bill clinton said you should keep your promise even if it requires new law. he was very direct and very
blunt. obama is not. you could be talking about at least 15 million on the individual market, chris, and you could be talking about another 90 million on the employer based market all during 2014. so what's obama move here? >> well, when you have james on or you're talking about bill clinton you're talking about i would call the great centered democrats of american political life. obama is not of the center. he doesn't want any modifications or any discussion. i think what he's doing now is what they used to say in nixon days the modified limited hang out. he's admitted some mistakes, he admits he want some changes. he'll blame it on the republicans. 5 million people had their plans cancelled. the reason their plans are cancelled is the insurance plans that those people have don't meet the requirements that the obama care law has set out. there are so many requirements and those plans are so onerous and sometimes so expensive that people -- that the current plans
and the payments they are making are too low so the insurance companies have to cancel those policies because they don't fit the obama care law and now those people have to go on private exchanges and be much more expensive for them. >> james, you yourself, i think have acknowledged this. the democrats are running from obama on this point. you guys -- here's a list of people that submitted and co-sponsored legislation. mary landru, mark pryor. you got stuff out there from senator johnson. you got it in the house you got a bill. why doesn't president obama endorse it. >> let's back up. president clinton was talking specifically. he said he was talking about young people that were in the pool that were four times above the poverty line. we're only talking about the individual market here, and we're only talking about people who didn't -- who had their insurance after 2010.
but the idea this is somehow or another that's broad base -- by the way the individual market is only 5% of the total. let's be careful what we're throwing around here. people get their health insurance cancelled all the time. you want to tell me that there were no health insurance cancellations before obama care? that's absurd. some of the things we're saying on here don't stand up to basic scrutiny. >> i think, james, it's wonderful 30 million people will be covered with insurance but the way it was done is so horrific because it's forcing every one of those people basically on to two programs either medicare or forcing them into the private insurance system. it will increase the cost. the other great mistruth, obama said everybody would get a $2,000 reduction in premium on average. the premiums are going way, way up because there's no cost containment at all except the medicare people. >> of course there is.
because you don't like obama care or because there's problems in the roll out you can't assert people are losing their health insurance because of obama care. people lose their health insurance all the time. you got have some kind of connection to reality here. it doesn't allow you to just go ahead and say every wild thing you want to say. >> james, mckinsey which is a nonpolitical, they say that probably one-third of the 150 million people covered by insurance today possibly and probably one-third, 50 million will lose their current employer coverage within the next two years. that's going to be momentus. it's an earthquake. >> be careful because i don't know, and i don't know the study and i don't know people losing employer coverage, losing their job. you just can't throw out these numbers about everybody gets a cancellation, gets it because of
obama care. we can say that it had a difficult roll out. we can say all of this. you got to be connected to reality. there has to be some connection. >> james, i'm connected. i'm connected with your argument. i want to disconnect your argument. today, the insurance commissioner of california used that figure, he said a million people have gotten cancellation. as a democrat he's elected to that position. you got the low level, what 40 to 50,000 people signed up. i want to jump ship. i want to ask you about this. they are expecting much more. now get this, we're told today that the obama administration is going to redefine what constitutes an enrollment or an enrollee. an insurance company will tell you you have to have a sign up, you get paid and then a membership card. not obama care. they will count as an flrlee someone who has chosen a plan -- >> get to respond.
>> i'll let you respond. somebody who puts it in their shopping cart that doesn't constitute an enrollee. >> don't let james respond. >> don't let me respond. how many people lost their health insurance in california in 2009? >> don't know. >> again, you're just sitting there and filibuster. larry, i love you to death. not everybody loses their health insurance loses it because of obama care. the president was talking about only people in the individual market, only people that were four times above the poverty line. just because you may not like the law, just because there's a problem with his roll out you just can't go make these blanket aserges a million people in california have lost their coverage because of obama care. that's not correct. >> james, the problem is, this is the tip of the iceberg of the roll out and we're seeing enormous problems. the biggest increase in health care koinch this country took place with you, james and bill clinton working with the republicans when they rolled out
medicare for low-income people. they added another 20 million people on to the insurance system. it worked. it's helped get people off of welfare as part of that deal. i don't understand why obama couldn't of the 30 million uninsured couldn't have been given basic protection under medicare which would have cost a lot less but what he's tried to do is force everybody into the private system and we're seeing the future now and we'll see the future in massachusetts. >> what we're saying on the kudlow report we should have just had single payer, national health insurance, everybody, make medicare applicable to everybody in the country. i'm fine with that. >> medicaid -- >> do it right now. i'm 100% -- >> that's a great compromise position. >> great compromise position, medicaid for everybody. >> that's not my view. >> that's my view. >> it's medicaid not medicare. >> he said medicare.
>> i don't want that. i want free choice. i want different tax reforms. >> you want what we had before. >> look. i want to give the tax break to the family and the individual. not the employer. i want people to have choice. look why should -- >> they are getting a tax credit. >> they are not. >> which is better. >> they won't get a tax credit. >> everybody can get the tax break. everybody buy insurance. >> huge tax increase. >> there's no such thing as a free lunch. the basic thing about medicaid is you get basic catastrophic coverage and do tax credits for people to get better insurance if they want. that's a great plan and a great compromise. >> i'm going to jump back. james carville -- anyway. james carville, chris ruddy hang out with me. we'll do something else. we'll talk about this hypothetical presidential race between chris christie and hillary clinton. we have a new poll that puts the
clinton/christie match-up on the front pages an you won't want to miss this. one of the best investment strategies had his insurance plan cancelled. we'll have him get in touch with his feelings and tell us what he's going to do about it next up. don't forget as always free market capitalism is the best path to prosperity. i want to be free to choose my own health care. i'm kudlow, we'll being right back. she loves a lot of the same things you do. it's what you love about her. but your erectile dysfunction - that could be a question of blood flow. cialis tadalafil for daily use helps you be ready anytime the moment's right. you can be more confident in your ability to be ready. and the same cialis is the only daily ed tablet approved to treat ed and symptoms of bph,
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everyone is talking about it even though its three years away. the 2016 presidential race be governor chris christie versus hillary clinton? very early nbc news poll shows hilary with a nine-point lead in a hypothetical race. john harwood joins us now for a little commentary on this. what do you make of this? >> reporter: we can't help ourselves. it's three years early. we just came out of a presidential election. because hillary clinton is so dominant over the democratic field in this poll we saw two-thirds of democrats say they intended to support as of this moment, and chris christie has just come out of this very, very large landslide win for
re-election in new jersey, the temptation is pretty irresistible. christie we see from this survey is not in as strong a position as hillary clinton. he gets about a third of the vote from republicans but the bulk of that comes from the northeastern states where he's from. he'll have to do well in many other parts of the country. but it's fun to watch and i suspect, i don't know how you feel about it, larry, if jeb bush doesn't run, i think he would be the strongest republican but if he doesn't as we sit today i think chris christie is in the best position. >> i had dinner with a former chief of staff to jeb bush. very interesting for you to say this. okay. so hilary is dominant. christie down nine points isn't badge as you were hinting, i don't think folks know governor chris christie outside of the northeast. >> reporter: no question about it. he's got good numbers. in our nbc/wall street journal poll before that we did a couple
of weeks before if you look at positive/negative ratings for american political figures chris christie had the most robust positive to negative ratio of anybody we had seen. this is somebody who is principally known to americans for having reached out to bill clinton during hurricane sandy, worked together with him, people like that bipartisan. they don't know that much about his record. republicans don't because, of course, he keynoted the convention. he'll get defined in many ways and in many ways that are unflattering in people running against him if he seeks the republican nomination. he has a lot of assets. and clearly from all the statements he made during his campaign and after he intends to use it. >> 32% republicans are for christie right now. 31% would prefer another republican. that kind of tells the story. he's got a lot, as you noted, a lot of work to do around the country. john, as the head of the republican governor's association and as a guy who
will be a big fundraising draw for senate seats as well as governor's seats he'll be well-known in a couple of months. >> not only will he be well noerngs he'll have a very, very good file of donors not just ones he's familiar with having worked new jersey and new york city, but around the country from having worked for his fellow republican governors. so he's got a lot of growth potential and i think we're going to see him play that to the max. we know from what happened to rudy giuliani a couple of years ago that just because you've got good early poll numbers and also are appealing to a lot of the people in the immediate where a who because you're a great interviewer and great story doesn't mean i want will translate when you get in the arena but chris christie has a shot and republicans will be hungry for victory. they lost two in a row. not sure they want to lose a third one before they get serious about electability and this is somebody who at least initially has some electability
assets. >> john harwood from washington, d.c. thank you very much for staying. >> up bet. all right. back with us now former clinton adviser james carrville and news max founder, chris ruddy. what do you think? >> first, i want to be clear. this is not the "wall street journal" nbc poll. this is not the poll done by bill mcintyre. >> this is nbc news. >> look. any poll that shows that something like 78%/22% undecided won't vote i'm skeptical of. having said that, i'm not surprised by the results one way or another and early polling in presidential races i don't think are determinative in something like this. i would wait and want to see a lot more before i jump to any big conclusion. hilary is very strong. she will be the democratic
nominee in all likelihood. she can win a general election. >> chris ruddy, can chris christie get the nomination on the republican side, in your judgment? >> well, i think there's a real shot he has because probably going to be a very fractured field as last time. you could have eight candidates running. he could be the establishment moderate candidate and he could take it. the problem is, larry, i believe it would be a disaster for the be republican party. i don't think they will beat hillary clinton with chris christie. i think they need to find somebody like jeb bush where you have somebody that articulates a vision consistent with the base of the party but has a record of governing from the center or center right and jeb had done a fantastic job down in florida. i know you know his record very well. governor christie's record in new jersey is fair to mid. not a great record. not about job performance. not great on economic performance. he's consistently alienated key parts of the republican base
like the national rifle association and other groups and organizations and i think that worked really well for him in new jersey with the new york immediate why. he's really loved. i think at the end of the day he won motivate the republican base which a candidate needs to do to win at least that's between history of republican candidates. >> james i'll give the last word on this. what about jeb bush? can he run, james, seriously? >> let me say, i agree with chris ruddy. i think this is kind of a henry kissinger, henry viii people sitting around a boardroom in new york. it won't resonate with the republican base. governor bush is a very talented politician. he's a really charming guy. but, you know, he's is going to run into some head winds. look at marco rubio as soon as he came out with the immigration thing. we'll see. >> chris christie will have some tough sledding.
i think there's a big myth that republicans don't want immigration reform. we want legal immigration reform. we want to deal with illegals but in a positive way. chris christie is not the answer. any state that picked these republicans like california has become a republican wasteland, new jersey is, new york, they occasionally elect a governor that's very much like a democrat but those states have no republican party and i don't want the republican party to being democrat-like. >> i got to leave it there. let me just say two things. number one best to mary who i just talked to on the radio on saturday. the other thing is the republican party stems me, this is grist for another day, the republican party has given up too many states. >> absolutely. >> they got to grow their electoral pie not shrink it. >> james carville, chris ruddy. up next we'll get the latest on the recovery efforts in the
philippines. there's new word that the number of dead might be a lot less than we first heard. that would be good news. stay with us, "the kudlow report". so if you have a flat tire, dead battery, need a tow or lock your keys in the car, geico's emergency roadside assistance is there 24/7. oh dear, i got a flat tire. hmmm. uh... yeah, can you find a take where it's a bit more dramatic on that last line, yeah? yeah i got it right here. someone help me!!! i have a flat tire!!! well it's good... good for me. what do you think?
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today rescuers are still trying to reach remote towns, some of which were completely destroyed by the typhoon. now moving on to business news. u.s. airways and amr the parent of american reaching a merger deal to become the world's biggest airline. the department of justice made their airline sell some spots at seven airports to make sure the new airline doesn't dominate those markets. walmart is making it official. thanksgiving no longer a day to spend at home with your family, the world's biggest retailer will hold major sales at 6:00 p.m. and 8:00 p.m. on thanksgiving night, earlier than last year. and new world trade center is officially the tallest building in the united states at 1776 feet tall. a committee of architects debated it since the last 408 feet is a needle but the architects say it is and of course that number is 1776 is also meaningful for americans. declaration of independence.
>> great. look am i being too capitalist. i'm in favor of shopping on thanksgiving. >> you're in favor of that. >> is that too capitalist? >> there's obviously some who say that's one day we have to spend with our family. but i hear you on that side as well. >> i keep the doors closed on christmas. thanksgiving, the puritans would shop if they were stale round. next on kudlow the brightest minds on business gathered for the dale book conference broadcast by cnbc. we'll give the highlights from the conference next up on kudlow. please stay with us. safely an. ♪ tracks! they connect the factories built along the lines. and that means jobs, lots of people, making lots and lots of things. let's get your business rolling now, everybody sing. ♪ norfolk southern what's your function? ♪ ♪ helping this big country move ahead as one ♪
call at any time paris summit of new york city, top ceos and many wall street's biggest investors sounding off on the economy, the markets and a whole lot more at the "new york times" dealb%k conference. cnbc the sponsor. >> it was a packed day at the dealb%k conference with tough talk about u.s. and european markets as well as talk about politics and new stock picks from mom continent money managers. overall the tone was a little bit bearish starting with the head of bridgewater associates.
he thinks in the near future retail investors will have a rough go to it. >> that alpha is a difficult game. most investors should create a balanced portfolio against that but it's a difficult situation. >> there was some point to froppiness and capital misa location by the economist who argued suggesting we're seeing prices out of whack. >> i worry about compressions in risk spreads, some froth in equity markets that don't quite match what forecasts are for the real economy. >> even tesla chief spoke a little bit about the market being out of whack. he said his own company, tesla, which has seen a 474% uptick at one point this year isn't where it should be. >> the high stock price was somewhat distracting to give us that valuation now is to give us a lot of faith in our future execution. >> and the entire wall street
apparatus might be flawed. >> in particular, wall street, there's been a bit of a cartel mentality built up over the years. we have a very small number of players. it's easy for firms to collude. that speaks to some of the negative effects that comes from undue concentration. and a lack of competition. >> should be an interesting six weeks or so as we see what happens with the yellen confirmation as well as this enormous s&p rally. back to you. many thanks. let's discuss this power summit with my power panel. here now lpl chief market financial strategist, president of empire and president of denny research. let me begin with you jeff. look, ray is a brilliant guy.
these are all smart guys. is he too bearish. what does he mean it's too hard to get to alpha. >> i don't know, larry. it's deja vu, a few years when all the talk "the new normal" was coming out and bad capital a location meant stocks would produce weak returns. that's not the case. about alpha, you know, alpha seems to be correlated to volatility in the markets. when volatility is low it's difficult for managers to capitalize on the winners. we're at a low point in volatility. that's likely to pick up as the years move forward. the wind will be to the back of alpha managers, active managers in the years ahead. a tough environment looking back. >> that's interesting. peter, a lot of hedge funds have underperformed the market. look at some of these studies and the s&p 500 has done better than the hedge funds.
>> right. you know what it is? hedge funds are looking for various opportunities and risks and with low volatility and with the market going in one direction, the opportunities are very limited. they are not stock pickers any more, they are sector pickers. they are reallocating assets to riskier assets. it's not the model that's working. what's working is investing in individual stocks or powerful groups and those are the ones succeeding. >> let's go back, mr. griffin said a couple of things. i watched the interview. he said there's too much collusion on wall street and number two he talked at some length about breaking up the banks. i think he want as return much
what's your take. >> i'm an observer like everybody else, an observe earthbound of the scene. he's right. there's a handful of firms. they are very powerful and tend to get the big deals and the big fees. but it's been like that actually for a while. wall street is a very dynamic place. firms do come and go. though compared to when i was on the street, there are a fewer firms and they are more powerful. and to their banks, it's imp emperrically true there's fewer banks. >> he wants to break them up. interesting point. >> i don't have a problem with that, quite honestly. i think that some of them are just way too big and are in too many businesses and i think a more competitive financial system is better than having one that's regulated like this. >> but the problem is really, this is a global issue.
we're not just talking about u.s. banks and some kind of financial vacuum. the reality is the world has become much more concentrated in terms of financial entities. we can break up u.s. banks. >> jeff, i think what he's saying is banks are too big to fail and he may also be inferring and there's some people that agree with this that banks are too big to manage. do you think that's the case? >> i definitely, larry i'm sorry to interrupt but i definitely think. with strong management you can manage anything. at some point in time it does become too big. i originally when i first heard him say that i was skeptical. after i listened to his reasoning it really made a lot of sense that, you know, what? if they separate the trading and investment arms from the banking arms of these big multi-national banking units it could possibly build more -- help build smaller
banks too. and become and bring more competition to the market. >> jeff, peter, ed please stay where you are. we're coming back to talk stocks and talk some more about the conference and ask one of our experts to get in touch with his feelings because apparently he's just had his own health insurance cancelled. i want to know what he's going to do about it. i'm kudlow. we'll be right back. my customers can shop around--
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welcome back to "the kudlow report". stocks slipping into the red in response to comments from the federal reserve officials on the future of tapering the dow dropped 52 points, s&p 500 dropped by four but the nasdaq eked out a slight gain to end in positive territory. tapering fears hit commodities. gold fell 10 bucks an ounce to 1271, a one month low. crude oil lost 2% just above $93 a barrel it's lowest price since may. we'll see if this trend continues in to tomorrow. >> many thanks. i'm back with my panel. now, ed, old friend, how do you feel getting your own health
insurance plan cancelled, jimmy wrote about it today. that's how i found out about it. i want to know, you know, you're a real smart guy. what your going to do about it and what should others do who are in the same boat. >> well i have a small business and i was surprised that my policy was cancelled. i thought i would get something offered to me that was very similar where i would have to pay for my benefits that my people really didn't need and would cost me more but, instead, they offered me an hmo with very limited network. so i'm in the market. i didn't expect to hear at year end our policy expires. i'm sure i'll find something. i don't know what it will cost me. that uncertainty i'm experiencing will affect the economy and have an adverse impact on the market or maybe even on fed policy. >> let's pursue this for a minute. very important point. a lot of people who are is going to lose their in, okay.
small businesses, individuals, et cetera, et cetera. they are going to have to shop for new plans. they will probably have to pay significantly higher premiums. they may have has ed suggested higher out of pocket costs. their networks in the new obama care may be too narrow and they want to pursue their doctors but they have to pay for it out of pocket. is that all combined jeff kind of a tax on the economy? is it going to be a slow down factor? >> it is a drag. we did some analysis on this. the number of people affected about how much their premiums would go up we tabulated it up. it's about what the u.s. spent on halloween this year. it's scary. >> it's scary but is it a big number? >> it's a significant number, sure. but it's not -- listen, it's a big issue for those that are affected. the vast majority are not affected. there are certain areas where
you'll see people materially impacted and it will affect their spending. broadly speaking it's a hit but not a major one. >> peter, it's funny, six months ago, nine months ago i would have argued this was the year you had two tax hikes this year, the top end tax hike as they redid the bush. 98% got their tax rates down. 2% had higher taxes. obama care tax hikes kicked in, capital gains, dividend, investment tax rates and yet none of this seemed to have affected the stock market. >> well, i mean, larry what happens is that the bottom line is earnings is still growing. people don't have the best place to put their money right now, a little more risk, put it in the stock market. you know, really, they don't have much choice. put it in something that will pay you less than 1% or a little above zero like in a savings account or put it in the market where there's opportunity to the make even if it's only 4% or 5%
you'll do better than in a money market or bonds. it's still the only game in town. >> i think profits are the mother's milk of stocks and i basically agree with what peter costa said. as long as profits are rising that's very healthy for stocks. question to you, ace forecaster that you are, will profits continue to rise? >> i think so. as a matter of fact we're looking at s&p 500 earnings to go from $110 to $120 next year and $130 in 2015. those are high single digit growth rates next year about 8%, 9% and same for 2015. you get there with revenue growth of 5%. 2% increase in margin which i think has an upsize, companies manage it very carefully. buy backs have been a huge part of the story and they get another 2%, 3%. >> you're staying bullish, you're staying long? >> my year end target is 2014.
>> 2014. >> easy to be. >> that's wonderful. okay. 2014? what's your take, profits going to rise? are businesses going to don't carry us? can stocks go that far? >> yes to all of the above. i think that importantly one thing we're not keeping in mind individual investors coming back. the great rotation is just starting. investors, our work shows the chase returns. they chase the five year rolling return in particular. that's just turned into the double digits and it's going to soar over the next several months. individual investors coming back to the stock market for the first time in a long time. not just corporations buying but individuals as well. that gets a little bit of pe lift next year in 2014. >> peter costa you were at the conference today, the dealb%k conference and some of these famous guys were a lot less
bullish than ed and jeff, for example and myself. what's going to take this down? what do we need to look for? what were they focusing on today that maybe we're not looking at? >> one of the things, a couple of different guys had said was that they are worried about federal government and they are worried about what's going on in washington. and they think washington, at some point, could put a damper on some of the rally, some of the euphoria we're still feeling in the stock market. now, i mean, after having attended that conference today, you would come out of there with a very mixed signal almost like to the bearish point. i have to tell you there's a lot more room on the cup side. we can fight through with whatever washington comes up with in january and february and i think that will be extended out another six months. but i think that, you know, just looking strictly at earnings and struckly on the economic -- the economy is growing, starting to grow a little bit faster and
that will translit into a very good year next year. >> larry, it's amazing how well we've done despite washington. >> agree. >> yes. >> i think you're 100% right. i rather like the spending cuts. i think it's a good thing. smaller government to me is better for the economy at least in the longer run. my friend glenn hubbard distinguished economist is worried about frothiness. i don't know. i don't see all this frothiness. gold prices. >> we're not there yet, larry. the other thing -- >> go ahead. >> i don't think we're there yet. but there's a potential for a melt up. but as i said, most likely scenario is that earnings will drive the market higher and hopefully not in a frothy fashion. >> all right. >> one thing that does scare me -- >> got to jump out. thank you. good luck on the search for
health insurance. up next on can you identify, low in a weak job market i can't think of anything dumber than doubling the minimum wage, guaranteed to create higher unemployment for the very young and minorities who are at the bottom of the scale and need a break for opportunity. when will people learn. we'll discuss all this coming up next on the kudlow report. americans take care of business. they always have. they always will. that's why you take charge of your future. your retirement. ♪ ameriprise advisors can help you
about rich versus poor, demagoguery. so-called inequality issues. we need to talk about growth and how a rising tide can lift all boats and where there's problems at the lower end of the scale jacking up the minimum wage wrong policy. various obama care taxes and regulations will make full time jobs at good wages scarce. old friend and mentor jack kemp used to say the trick is make the nonrich rich through economic opportunity and incentives, never punish success. that's my little sermon. here now we bring in this to discuss this, deputy chief of staff and cnbc contributor jim from the american enterprise institute. jimmy, you're writing today, one of the smaller towns out in the state of washington, they want to double the minimum wage. president obama now wants to go i guess from $7 and something to $10. i can't think of anything
dumber. >> right. it's a cost of hiring. disincentive for businesses to hire. politicians love it because it doesn't cost them any money. something like a direct wage subsidy, expand the eitc tax credit. that goes on the books of government. unions don't like it because they think people won't support it. politicians don't like it. let's raise the minimum wage. you may get higher wages for people with jobs but end up losing jobs over the long term. >> i know you'll disagree but unions are supposedly for the underdog. they want to help the younger people, african-americans and hispanics. to me this jacking up the minimum wage proposal will price these people at the low end of the scale, price them out of the market. >> it doesn't work that way, larry. in fact increase in the minimum wage is long overdue and we haven't seen a big employment impact from raising the minimum wage. what you do see is workers have money in their hands so they can
go out and be good consumers. it's long overdue. minimum wage has lost tremendous value over the last couple of decades and what we're seeing is people working full time, year round, are still living in poverty. they can't feed their kids. this is a wealthy country. no reason why workers work full time and be point university. >> there's a trade off. we can disagree with the exact be nature of the tradeoff. there's a wage/job tradeoff. >> you want the government to subsidize low wage employers. that's essentially -- >> have a clear transparent non-market distorting wage subsidies. i much rather have that instead of expanding etic, how about people who don't have kids rather than raising the minimum wage. >> actually it's not a job killer that's the key point >> you're wrong. >> when the minimum wage goes up, workers tend to stay on their jobs longer and they are
more productive. so it is not necessarily a cost to business and they have more money in their pockets and they can buy the hamburgers. >> you want people to get on that ladder. that prevents people from getting on that ladder. >> if it doesn't have a negative job impact -- >> it does. >> what it does do -- >> it shows it does. >> let me ask you, thea. this debate goes on in washington and around the country. but i just want to ask you about the low end issue. a lot of people front page story on the "wall street journal" saying that the prepon derrance of new job creation under team obama is low wage. that they are going in, you know, restaurants and leisure areas and that's going to be think it hardest by obama care, that once you raise the cost structure of the economy, that's going to be damaged. so part time workers instead of full time workers. you won get the benefit of higher wages. minimum wage adds another cost on the employer, okay.
i haven't heard you talk about the business. what is the business man or business woman going to do if he or she has to pay these higher costs. they can't do it, thea and people at the low end of the scale who are trying to climb the first rung up the ladder will be denied an opportunity. >> what we do see is that if you have lower turnover, then you get more, then workers stay on the job longer and you can train them longer and be more productive. it actually is good for business. at the end of the day business has to sell stuff to somebody and the reason the economy is so weak, the reason we had such a slow economic recovery wages are too low. we need to put money in the pockets of working people so they can buy stuff to power the economy. it's not so much -- i heard you talking earlier about profits and earnings. profits are fine. what isn't fine is wages. purchasing power for the middle
class and average worker. if workers haven't had a raise in 40 years there's no way that we're going to be able to have a strong vibrant consumer driven u.s. >> you haven't mentioned a last single study or statistics to back that up. >> we've done stew dips in two states next to each other. >> slow economic growth is hurting jobs absolutely. inequality driving the slow economy. there's zero data to back that up other than a wish and a hope by threat. >> there's a lot of data where people looked at two states right next to each other. one that want raised the minimum wage and one that wasn't. the one that want does raise there's no adverse impact. >> they don't hire. >> they do actually hire more people. in fact, there are a lot of countries with high minimum wage that have strong economic growth. >> germany has no minimum wage.
>> germany has very strong wages. >> i got to get out. >> it seems to me those who pay high benefits, they are stuck and mired and endiminished in high unemployment rates. i got to get out. we'll do this again i promise. thanks very much. we'll be coming to you live from washington, d.c. tomorrow. my special guest former veep, dick cheney. i got this.
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>> narrator: in this episode of "american greed"... trevor cook claims to have a revolutionary new way to trade foreign currency with guaranteed profits. >> investments were safe and protected and in segregated accounts. >> i am here to give you solutions to this massive fiscal pollution that everyone in this country is experiencing without exception. >> narrator: and more than 700 investors rolled over their life savings. >> i thought, "this is very impressive. it's invested overseas, so therefore it isn't taxed." oh, my goodness. this is just too good to be true, isn't it? >> narrator: but no one knows